You can feel the love in Silicon Alley. The city’s tech scene is a brotherhood of mutual admiration and support. “Proudly Made in NYC” proclaims Meetup’s website; “Hatched in NYC” notes Aviary’s. Founders wear each other’s company T-shirts and tweet each others’ releases. They made “We Are NY Tech” buttons for South by Southwest and wore them proudly. Once in Austin, Betabeat asked the Bay Area superangel Dave McClure about the city’s tech prospects. “New York needs to stop smelling its own farts,” he said.
Yes, on the record.
Still, it turns out there is a limit to camaraderie. When it comes to hiring, especially in a competitive market, the shivs start flashing. Of the 184 startups that have “Made in NYC” emblazoned on their websites, no fewer than 130 are staffing up. That means if you want to build a startup, you’re going to have to poach some devs.
Engineers don’t hop around in New York as much as they do in Silicon Valley, where noncompete contracts are unenforceable, but the city’s congenial entrepreneurs are raiding one another’s employees with increasing frequency. Before GroupMe was acquired by Skype for about $80 million, the well-endowed group-texting startup plucked developers from Gilt Groupe, Pivotal Labs and College Humor. The CTO of the fast-growing Betaworks startup Chartbeat, Kushal Dave, jumped to Foursquare in July 2010; the Union Square Ventures-funded Shapeways snagged Signpost’s former tech director a few months ago.
But startups don’t just compete over technical talent, which is in famously short supply. Thrillist nabbed Gawker’s Richard Blakeley to manage content strategy in March, and Crowdtap snatched marketing whiz kid Ben Kessler from SeatGeek in September. “We’ve hired about 500 people in the last 12 months,” said Kevin Ryan, the founder and CEO of Gilt Groupe, who still personally interviews every candidate. “They all have to come from somewhere.”
And while some take the Machiavellian view—“Is there any etiquette to that? I thought all’s fair in love and war,” said Lean Startup Machine founder Trevor Owens—most startups do observe certain gentlemanly guidelines. The unspoken rules of poaching are fairly clear cut. Don’t poach from early-stage companies you share an investor with. Get your investors involved if there is a possibility of taboo intraportfolio hiring. And by all means, keep your friends out of it whenever possible if you ever want to show your face at Tom & Jerry’s. “Never poach from close friends or people you know pretty well,” said Jason Baptiste, the swaggering, crew-cut-sporting CEO of OnSwipe. “That’s a cardinal sin.”
He would know. Last spring, Mr. Baptiste stood up in front of his classmates in the TechStars accelerator and triumphantly announced that his company had raised $1 million in the first week of the program. “Hide your developers, hide your designers, because we’re hiring everybody,” he said, referencing the catchy “Bed Intruder” remix that made its way around YouTube last year. The joke got a laugh, but no matter: Bloomberg Television, in the middle of taping a TechStars reality show, juxtaposed the scene with soundbites from local founders Vin Vacanti and Dennis Crowley talking about the delicacy of poaching at a time when talent is scarce. “Let me give you some advice: I wouldn’t tell the other companies you’re trying to hire their people,” TechStars director David Tisch said on the show. After receiving a stern dressing-down behind closed doors, Mr. Baptiste promised, “Everybody here is safe.”
“Randomly spliced stuff,” Mr. Baptiste said of the episode. “No one thought we were going after any of the other TechStars companies. We weren’t and never would. Seriously.”
The politics of poaching can be even more delicate for hot companies like Foursquare, considered one of the most attractive startup employers in the city by developers and nontechnical job-seekers alike. Foursquare is one of the most active evangelizers for New York tech; founders Dennis Crowley and Naveen Selvadurai appear everywhere from conference keynotes to Gap ads. The resumes of Foursquare’s 70-some employees are dotted with New York startups, including the now-defunct Hot Potato and the still-existing Thing Labs. But even though hiring the best people possible is the company’s top priority right now, Foursquare says it does not poach. “We know that all it takes is stealing one engineer from a startup to make the entire community feel like Foursquare is going after their best people,” said Susan Loh, the company’s head of recruiting, who was hired away from Yelp. “Many of us have friends at these companies, so we want to make sure that if we do end up hiring someone from another startup that it’s not going to disrupt our relationship with these startups at all.”
(Although if anyone should be afraid, it’s Google. Foursquare boasts a fierce legion of Xooglers, including Ms Loh, Mr. Crowley, head of product Alex Rainert, platform evangelist Ashkay Patil, lead engineer Harry Heymann, public relations manager Erin Gleason and many others.)
To avoid any strife in New York startup land, Ms. Loh regularly updates the management team on whom she’s talking to from other startups. If Foursquare did covet an employee of another startup, she said, Mr. Crowley would talk to the employer directly and make nice.“In general, I think the New York tech scene really knows how to play well with each other,” she said. “I don’t see a lot of the aggressive poaching you see in Silicon Valley.” (Foursquare recently started recruiting for its new office in San Francisco.) Still, even Foursquare has to play defense. “One day I had a huge package show up at the office with letters written to every one of our engineers,” Ms. Loh recalled. “Hand-written letters, but it was the same letter written 12 times.”
Mass love notes, courting over LinkedIn and other ham-handed recruitment efforts usually come from nontech industries or third-party tech recruiters, some of whom are notorious for targeting those who seem happily employed. “We close the unrecruitable candidates,” boasts Daversa Partners, whose clients have included Gilt Groupe, SecondMarket and Twitter. It’s these recruiters that make the city-wide talent search, which otherwise would be merely tense, into a paranoid frenzy.
Mr. Ryan sees “zillions” of attempted poachings at Gilt, although the vast majority are unsuccessful, he said. “I’m not sure that poaching is any different from hiring,” he said. “I’m not sure where one draws the line.”
Which is not to say he’s willing to be raided himself. When the CEO of a much smaller New York startup asked Mr. Ryan for hiring advice, he told her the key was to have a dedicated recruiter on staff. Four weeks later, the CEO made a very attractive offer to Gilt’s internal recruiter. “She was desperate,” Mr. Ryan said. “I don’t think it was a good move for the long term. That will irreparably hurt our relationship.” To make things worse, the recruiter declined to leave.
When it comes to poaching, Mr. Ryan operates by a simple maxim: don’t try to nab anyone who had been introduced by a boss or a common investor. If a candidate is discovered in the course of a recruiting search, however, he or she is fair game.
The case could be made that the various tacit no-poaching agreements that keep things relatively congenial at New York’s many techie social events is exerting a negative pressure on salaries, keeping pay rates artificially low.
Mr. Ryan didn’t think that was a danger. “There are literally hundreds of companies here,” he said in an email. “Most companies have a few companies that are on a no-hire list (we generally have six to seven) for legal or relationship reasons. [But] this is out of 1,000 companies, so no big deal.”
Besides, as competition for talent continues to heat up, the gentlemen’s agreement seems to be eroding. “Recruit away our team. I dare you. Heck, I encourage you” was the title of a recent blog post in which Jason Goldberg, CEO of Fab.com, a daily-deal site focused on design, dared poachers to just try sweet talking his staffers into jumping ship. He even offered to hand over their phone numbers. Later, as if to underline the point, he boasted to Betabeat, “Guess what? I’m going to call those companies and try and recruit their people.”
When news came out recently of one high-profile New York startup’s demise, another startup founder admitted he’d been secretly courting one of its top engineers. “This is going to make life a little more challenging for me,” he told us. “A lot of people will start hitting on him. But that’s fine. Competition is a good thing.” Dave Carvajal, a tech recruiter, noted that the longstanding rule that one shouldn’t recruit from other companies within the same investment firm is increasingly broken. “What’s happening is it doesn’t even matter anymore,” he said, noting that clients simply say, “‘Get me anyone from any good company.’ No holds barred.”
One New York founder told us in a casual conversation that his rules were hard and fast: no going out and poaching from fellow startups, but if an application comes in, tough luck.
Not that he was willing to say so on the record. “Don’t really want to be quoted for poaching in case we actually end up poaching someone in the future,” he said in an email, punctuating with a smiley face, of course.